Research by Baring Asset Management's annual consumer investment survey found that investment sentiment towards emerging markets is strong. This contrasts with the Association of Investment Companies' recent survey of investment trust managers, which found managers favour Europe and the UK.
Annabel Brodie-Smith, communications director at the Association of Investment Companies (AIC), says: "The West is very much in vogue with fund managers, perhaps not surprisingly given the volatility we have seen in emerging markets this year. Fund managers have chosen Europe as the top performing region for the second year in a row and the UK is back in favour, in sharp contrast to last year when it scored no votes with managers. Smaller companies are tipped as the top performing sector, but blue chips are hot on its heels, reflecting managers' division on this."
By contrast, the Baring Asset Management survey found there is an uplift/trend between 2009 and 2013 in the numbers of consumers investing for the long term in emerging markets as part of their retirement planning.
For the 2013 survey, over one in 10 (11 per cent), the equivalent of 5.4 million people, said they were likely to invest in emerging markets in the next year in respect of their retirement planning. This is up from 9 per cent in 2009 (4.1m). Of those 5.4m people in 2013, 4 per cent (1.8m) say they are "very likely" to do so - up from 2 per cent in 2009.
Asia remains the most common emerging markets target - one in 10 (11 per cent) would invest in Asia for the long term. This is up from 4 per cent in 2010. Regionally, this is followed by the Brics - Brazil, Russia, India and China - (7 per cent) and Latin America (up to 5 per cent from 1 per cent)
Of those people that definitely will invest in emerging markets next year, 6 per cent - the equivalent of three-quarters of a million people - would invest in frontier markets. Meanwhile, 5.2m people (42 per cent) would invest in Asia, the most popular choice.
Overall, investors are seemingly more inclined to accept emerging markets as part of a well-balanced and risk-adjusted portfolio on a long-term basis.
However, Stephen Cohen, chief investment strategist for iShares EMEA, says: "It's essential to differentiate between emerging markets. Countries with strong current account fundamentals such as Korea and Taiwan should see more resilient performance amid Fed taper concerns, as should China. A minimum volatility strategy for broad emerging markets exposure may provide more attractive risk-adjusted returns."
